MyMD Pharmaceuticals, Inc. (NASDAQ: MYMD) — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. MyMD is a clinical-stage biopharmaceutical company developing MYMD-1 and Supera-CBD; it reported no product revenue.
Financial performance and position
| Metric | Q3 2022 | Nine months 2022 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $1.80 million | $6.60 million |
| Administrative expense | $1.55 million | $4.30 million |
| Net loss, per financial statements | $3.69 million | $11.45 million |
| Basic and diluted loss per share | $0.09 | $0.30 |
| Operating cash used | Not presented for quarter | $10.02 million |
- No gross profit or operating margin is meaningful because the company had no revenue.
- At September 30, cash and cash equivalents were $0.31 million and marketable securities were $6.77 million, down from $0.56 million and $11.00 million, respectively, at December 31, 2021. Working capital was $6.30 million; shareholders’ equity was $18.33 million and accumulated deficit was $90.01 million.
- Total liabilities were $1.90 million, including $1.72 million of trade and other payables and $0.16 million of lease liabilities. The filing shows no material outstanding borrowing balance; $29,982 due to former MyMD Florida shareholders remained recorded as a liability.
- Investing activities provided $4.23 million, primarily reflecting $9.00 million of marketable-security sales less $4.77 million of purchases. Financing provided $5.55 million net from the August equity offering. Cash declined by $0.25 million over the nine months.
Changes versus prior comparable periods
- Q3 net loss improved from $5.47 million in 2021 to $3.69 million in 2022. R&D expense declined 39.5%, mainly after completion of required dog and rat toxicology studies; administrative expense rose 8.8%.
- For the nine months, the financial statements report net loss of $11.45 million versus $26.65 million in 2021. The comparison is affected by $15.04 million of 2021 stock-option modification expense related to the merger and $0.70 million of prior-year interest and debt discount expense.
- Nine-month R&D expense increased 9.6%, reflecting higher regulatory costs associated with the MYMD-1 Phase 2 study, partly offset by lower development-program costs. Administrative expense increased 6.9%.
- Common shares outstanding increased to 39.47 million from 37.67 million at year-end, including 1.41 million shares issued in the August offering. The offering also included warrants for up to 1.41 million shares.
Outlook, commentary and risks
- Management said available financial resources were sufficient for the current operating budget and contractual obligations for the next 12 months from issuance of the financial statements. The company nevertheless has recurring losses, expects significant development spending, and states that it will need substantial additional funding.
- MYMD-1 was being evaluated in a multicenter, randomized, double-blind, placebo-controlled Phase 2 trial for sarcopenia and frailty. The company reported trial delays related to difficulty recruiting participants and delays receiving clinical supplies from a manufacturer in India.
- Supera-CBD remained in development; the filing provides no specific financial guidance, commercialization timetable, or projected revenue.
- Risks include clinical and regulatory uncertainty, reliance on third-party research and manufacturing, access to future capital and possible dilution, volatile share price, intellectual-property protection, and potential COVID-19-related disruption.
- A shareholder’s whistleblower-retaliation action was in discovery as of October 31, 2022. The company said it believes the action is without merit; legal fees are expensed as incurred.
- The company disclosed a 2021 wire-fraud loss of $1.06 million related to a compromised email account and an additional $207,220 loss in October 2021; it reported a $4,442 recovery in the first nine months of 2022.
- The Scientific Advisory Board was disbanded effective September 30, 2022. Management reported effective disclosure controls and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Net-loss discrepancy: The financial statements and liquidity discussion report nine-month net loss of $11.45 million, while the MD&A results table reports $11.29 million and operating loss of $11.32 million. Reconcile these figures against the filed statements.
- Confirm the basis for management’s 12-month liquidity assessment against cash burn, marketable securities, clinical-trial spending, and expected financing needs.
- Check Phase 2 enrollment and supply status, trial milestones, and the timing and cost of further development for both product candidates.
- Assess potential dilution from outstanding options, warrants, restricted stock units, and any additional financing.
- Review the status and possible exposure of the pending shareholder litigation and the company’s intellectual-property and royalty obligations.